Analyzing the Performance of the Canadian Real Estate in H1 2025 and Future Prospects with Carney's Game-Changing Bill C-5.

The Canadian real estate market is undergoing a significant transformation, especially in the first half of 2025. With Bill C-5 introduced by Mark Carney, we are likely to see shifts that could impact both residential and commercial real estate across the nation. This post examines the performance and trends observed during H1 2025 and analyzes how Bill C-5 might shape the future of the Canadian real estate sector.

Overview of Canadian Real Estate Performance in H1 2025

Despite global economic uncertainty, Canada’s real estate market has shown moderate signs of resilience and cautious recovery. In the first half of 2025, home sales increased slightly month-over-month, particularly in major cities, though year-over-year activity remains mixed. Housing starts have improved modestly but still fall short of long-term needs. National average home prices declined by approximately 1–4% year-over-year. In urban centers like Toronto and Vancouver, prices also saw annual decreases. For example, Toronto’s average home price in June hovered around $993,000, down about 4–5% from the previous year. Detached homes in the city are selling below the $1.5 million mark on average.

Commercial real estate activity has been stabilizing as companies adapt to hybrid work environments. Office space demand remains uneven, with some urban markets experiencing modest rebounds, especially in high-growth tech corridors. However, commercial property sales overall have not seen remarkable improvement, and vacancy rates in office towers remain elevated in some downtown cores.

Key Factors Influencing Performance

Several factors are contributing to this positive trajectory in the Canadian real estate market in H1 2025.

1. Mortgage Rates: Interest rates remain elevated compared to historic lows. The typical mortgage rate in mid-2025 is above 5%. These higher rates have dampened affordability and buyer enthusiasm, particularly among first-time buyers.

2. Job Market: Canada’s labor market remains strong, with unemployment at 6.9%, close to pre-pandemic levels. This has helped support buyer sentiment despite affordability concerns.

3. Population Growth: Canada continues to experience robust immigration, with over 400,000 newcomers arriving in 2025 so far, contributing to strong underlying housing demand—especially in larger cities. However, this has intensified pressure on already limited rental and resale housing supply, particularly in the affordable segment.

Together, these dynamics suggest that while demand remains strong, affordability constraints and higher interest rates are tempering market momentum.

Bill C-5: What’s at Stake?

Mark Carney’s Bill C-5 (One Canadian Economy Act) introduces crucial changes aimed at enhancing housing affordability and sustainability. It proposes important measures, including:

• Increased Taxation on Secondary Homes: This aims to curb investment speculation to make way for more homeownership opportunities.

• Incentives for Affordable Housing Development: Developers will receive support to create residential units at accessible price points.

  
  

A central theme of the bill is climate-conscious development. Future residential projects may be required to adhere to net-zero or low-carbon building codes, supporting Canada’s national emissions reduction targets. This integrated approach addresses both housing affordability and environmental sustainability, offering benefits for developers, municipalities, and residents alike.

Implications for Buyers and Investors

For buyers, the Bill C-5 introduces both opportunities and new considerations. Incentives for affordable housing could make ownership more attainable, particularly for first-time buyers and young families. While specific pricing (e.g., $350,000 units) is aspirational, such benchmarks may be achievable in select regions, especially if combined with federal and provincial support programs.

On the other hand, proposed taxes on secondary and vacant homes may reduce speculative investment in urban centers. Investors may need to adjust strategies—for example, by focusing on:

• Mid-market or multi-family housing

• Renovating older stock

• Developing energy-efficient rental units to align with new environmental standards

Staying flexible and informed about policy changes will be key for both individual and institutional investors navigating this evolving landscape.

Future Market Trends

Looking ahead, moderate growth and policy-driven transformation are expected to shape the Canadian real estate market in H2 2025 and beyond.

• Demand for sustainable, energy-efficient homes is rising, particularly among younger buyers and urban dwellers. Developers who incorporate green building practices and mixed-use planning may gain a competitive advantage.

• While mortgage interest rates are currently elevated (above 5%), they may remain steady or decline slightly depending on inflation trends and Bank of Canada policy. Buyers should monitor closely, as interest rate shifts directly affect affordability and qualification limits.

• Bill C-5 could stimulate more public-private partnerships in affordable housing development, encouraging innovative solutions such as:

  • Modular or prefabricated homes

  • Mixed-use developments that combine commercial, retail, and residential spaces

  • Transit-oriented projects in growing suburbs

Final Thoughts

While the Canadian housing market is not experiencing a major rebound, it remains resilient and active, especially in regions with strong immigration and employment fundamentals.

Bill C-5, as introduced by Mark Carney and passed into law, represents a potential turning point for housing policy—addressing affordability, curbing speculation, and promoting environmental sustainability. If implemented effectively, it could reshape market dynamics over the coming years.

Real estate stakeholders—including buyers, investors, and developers—must remain agile, well-informed, and sustainability-focused. With collaboration between government and industry, the future of Canadian real estate could be defined by innovation, inclusivity, and long-term value creation.

With our expertise and track record in the Canadian Real Estate Sector, we are committed to assisting you every step of the way in reaching your investment goals. Whether you are selling, buying, investing, leasing, or managing properties, please feel free to contact us for a discussion. We guarantee thorough research, due diligence, professionalism, and unwavering commitment to ensure your satisfaction.

Lawrence Otu, Ph.D.

Residential, Commercial, Rural,

& Property Management Professional

D Gees Realty Inc.

825-994-4266

Lawrence.otuc@gmail.com